May 10, 2008

 

CBOT Soy Review on Friday: Soars; USDA data sparks bullish moves

 

 

Chicago Board of Trade soybean futures ended sharply higher Friday, soaring to two-week highs on bullish ending stock data, technical buying and underlying planting concerns.

 

May soybeans settled 51 1/4 cents higher at US$13.49 1/2, July soybeans finished 48 cents higher at US$13.58 and November soybeans ended 58 cents higher at US$13.03 3/4. July soymeal settled US$3.30 higher at US$338.50 per short tonne. July soyoil finished 245 points higher at 62.00 cents per pound.

 

Tightening projected ending stocks from the U.S. Department of Agriculture was the dominant feature of the market, as the data reconfirmed a very bullish fundamental structure in the soybean complex, said Greg Wagner, analyst with Ag Resource Company in Chicago.

 

The tight stocks leave little room for error in 2008 production, and with concerns over low germination rates in soybean seeds this year, the question of how yields will turn out amid planting delays and wet, cool conditions enticed traders to add premium to prices, analysts said.

 

Strong demand outlooks were seen carrying out into the 2008-09 marketing year, as "the global economic engine driving soybean demand has not been derailed," Wagner added.

 

Technical buying aided the higher tonnee, with the ability of the active July future to breach major moving-average resistance, uncovered pre-placed buy stop orders, traders said. Spillover support from record-high crude oil prices and the unwinding of corn/soybean spreads added strength as well, traders added.

 

The USDA estimated U.S. 2007-08 soybean ending stocks at 145 million bushels, down 15 million from the 160 million estimated in April. The USDA estimated U.S. 2008-09 soybean ending stocks at 185 million bushels, below the average analyst estimate of 273 million.

 

Looking ahead, traders will watch for new developments in the Argentina strike as well as planting progress for clues to future direction after the weekend after digesting USDA data, analysts said.

 

In pit trades, buyers and sellers were scattered among various commission houses, with speculative fund buying estimated at 2,000 lots.

 

 

SOY PRODUCTS

 

Soy product futures climbed in unison with soybeans, with soyoil futures spiking to two-week highs. Soyoil leaped higher, benefitting from strong soybeans prices, as well as soaring crude oil futures, as the biofuel link between energy futures and soyoil fueled bullish momentum, analysts said. Technical buying accelerated the gain also, with the ability of futures to gap above recent highs and major moving averages on charts attracting buyers, analysts added.

 

Soymeal futures ended Friday's session posting solid gains, feeding off the supportive influence of soybeans, traders said. However, advances were held in check by oil/meal spreading as meal continued to lose product share to soyoil, traders added.

 

July oil share ended at 47.80% and the July crush ended at 68 3/4 cents.

 

In soymeal trades, buyers and sellers were scattered among various commission houses, with speculative fund buying estimated at 1,000 lots.

 

In soyoil trades, buyers and sellers were scattered among various commission houses, with speculative fund buying estimated at 2,000 lots.